As I was reading it, I started to think about applying LTV to the methodology. When you think about making decisions based on LTV, the story becomes even more clear. All will be revealed (with a graph!) after the break.

This is one of the first questions I ask all my clients. The answer usually comes back including some aspect of “buy low, sell high” and other margin-related facts. Regardless of the complexity or depth of the answer, one word is always included.

The magic word is “people.”

So why isn’t all marketing done on customer lifetime value (LTV)? What are the five things you need to consider when developing LTV-based models that allow you to build CPA (cost per acquisition) based marketing plans?

A client recently asked me “who can tell me if my website is working well for me?” My immediate response was “your customers and your browsers.” This, of course, triggered a conversation of how it was possible to talk to tens of thousands of (usually) anonymous visitors, collect their insights and then translate that to marketing improvements.

Prior to a large amount of advertising moving to the web, with the associated tracking and analytical capabilities, my response didn’t make a lot of sense. Unless you were the sole proprietor of a local general store or had massive resources to undertake a large amount of expensive primary research, it was really hard to figure out what exactly about your marketing was working for your customers and prospects.